NTPC seeks govt direction for RIL at contracted price

New Delhi: State-run NTPC has asked the government for allocation of natural gas from RIL at a price of USD 2.34 per mmBtu, pending the outcome of its court case against the Mukesh Ambani-led firm on the issue.

Stating that it has requested Power Ministry to take up the issue with Oil Ministry subject to the outcome of court case, NTPC Chairman R S Sharma has sought necessary direction from the government for fuel supply at contracted price.

RIL in a 2004 NTPC tender offered to supply 12 million standard cubic meters per day of gas from its eastern offshore fields for 17 years at a price of USD 2.34 per million British thermal unit, but has refused supplies saying a firm contract was not concluded.

NTPC on the other hand says RIL`s acceptance of its Letter
of Intent (LoI) was enough for the contract to be concluded.
The matter is now before the Bombay High Court.

Sharma wrote to Power Secretary H S Brahma on November 17
that RIL has told the Supreme Court that KG D-6 field life was
11 years and gas could not be supplied to NTPC for 17 years.

As NTPC`s contract is for 17 years, RIL`s submission about availability of gas for 11 years only "has serious implications on the supply of gas to NTPC as per bid submitted by RIL and will go against NTPC`s interests," he wrote.

Sharma asked Power Ministry to request Empowered Group of Ministers for necessary direction for supply of gas to NTPC at
"the price and terms of the contract with RIL" without
prejudice to the ongoing case.

"This would imply that by the time the NTPC`s suit with
appeals etc is finally decided, there may not be gas available
to meet RIL`s supply obligations," Sharma said.

During the course of hearing on its gas supply dispute
with Anil Ambani Group firm RNRL, RIL counsel had stated that
RIL`s bid for NTPC tender was subject to conditions like
approval of its field development plans and said that if it
was proved in courts that the contract with NTPC was
concluded, the Mukesh Ambani firm would supply gas at rates
which are 44 percent lower than government-approved gas price
of USD 4.2 per mmBtu.

"I would request for intervention of government to protect NTPC`s interest at this stage itself and give necessary directors to RIL to supply 12 mmscmd of gas for a period of 17 years for NTPC`s expansion projects at Kawas and Gandhar at the terms and price of NTPC suit contract with RIL," Sharma wrote.

RIL had committed gas to NTPC`s Kawas and Gandhar expansion projects, which are about three years away from commissioning.

"Ministry of Power may please request Empowered Group of Ministers for necessary directions for supply of gas to NTPC`s aforesaid expansion projects at the price and terms of the contract with RIL without prejudice to NTPC`s rights and contentions in the NTPC vs RIL suit. This will ensure availability as well as supply of gas to NTPC," he wrote.

Sharma said that RIL counsel while arguing on dispute with RNRL, told the Supreme Court that "subsequent to the submissions of its bid by RIL (for NTPC tender), as would appear from the development plans for KG D-6 block as approved by the government, the gas would be available for about 11 years only and therefore RIL would not be able to supply gas to NTPC for the period of 17 years as per its bid."

He said he had after the judgement of the Bombay High Court in RIL vs RNRL case, NTPC had requested Power Ministry to take up with Ministry of Petroleum and Natural Gas for allocation of 12 mmscmd gas at a price of USD 2.l34 per mmBtu to NTPC subject to the outcome of the NTPC vs RIL suit.

RNRL is seeking 28 mmscmd gas from RIL as per a private
family agreement on NTPC terms. The Bombay High Court had
ruled that RIL should honour the commitment to RNRL and the
matter is now in the Supreme Court after the Mukesh Ambani
firm challenged it.